Medacta Group SA reports revenue growth of 14.3% at constant currency and adjusted EBITDA margin 26.9%, or 28.1% at constant currency in 1H 2024. – Biotech Investments

Press Release – Ad-hoc announcement pursuant to Art. 53 LR                          

Medacta Group SA reports revenue growth of 14.3% at constant currency and adjusted EBITDA¹ margin 26.9%, or 28.1% at constant currency in 1H 2024.

First Capital Markets Day on 25 September 2024 to showcase the business strategy and mid-term outlook.

• 1H 2024 revenue increased to EUR 288.6 million, or 14.3% at constant currency¹ (13.1% reported) from 1H 2023;
• Adjusted EBITDA grew to EUR 77.5 million, corresponding to 28.1% margin in constant currency, or 26.9% reported;
• 1H 2024 profit increased to EUR 38.0 million (13.2% of revenue), representing a growth of 30.4% compared to 1H 2023;
• Outlook FY 2024: guidance confirmed – revenue growth at constant currency in the range of 13% to 15%, and Adjusted EBITDA margin at constant currency improving around 50 bps from 2023 reported, subject to unforeseen events;
• Mid-term Outlook: revenue Compound Annual Growth Rate (CAGR) at constant currency is expected to be in the low double-digits region, and Adjusted EBITDA targeted to be around the 2024 result, before any currency effects.

CASTEL SAN PIETRO, 25 September 2024 – Medacta Group SA (“Medacta”, SIX:MOVE) today reported financial results for the Half-Year ending 30 June, 2024 and hosts the first edition of the Capital Markets Day.

Francesco Siccardi, CEO of Medacta, commented: “The first half of 2024 delivered strong revenue growth, driven by our balanced geographical footprint and an effective marketing strategy to seize new opportunities. We are particularly pleased with this outstanding performance, which, in the year of our 25th anniversary celebration, further confirms the strength of our strategy and values, as well as the company’s ability to significantly outpace the market growth. Thanks to our continued focus on cost control, we were also able to defend our profitability despite higher sales and marketing expenses in the early part of the year.”

Our Achievements 

In 2024, Medacta is celebrating its 25^th anniversary with a World Tour that features a series of global scientific events, starting in April with the 10^th M.O.R.E. International Symposium held in Switzerland, followed by events in Australia, the U.S., and Japan. These events underscore our commitment to medical education by fostering the exchange of experience and knowledge among distinguished surgeons worldwide, focusing on how to improve patient outcomes through the sustainability of personalized medicine and technology in orthopedics and spine surgery.

• On the Knee side, after the 2023 launch, in the first semester of 2024, we continued introducing SpheriKA in Europe. Preliminary studies have successfully confirmed the initial positive results in terms of patient outcomes of the GMK SpheriKA^2,3, the first knee implant specifically designed for Kinematic Alignment procedures. It adds further value to Medacta’s MyKA platform, the most comprehensive solution for accurately and reproducibly performing Kinematic Alignment in Total Knee Replacement. Moreover, a new version of NextAR Knee was released, featuring significant enhancements to the user experience with a simplified workflow and improved intraoperative planning and soft tissue assessment interface, facilitating tailoring the surgeons decision-making process to the actual soft-tissue behavior of each patient, driving further market adoption.

• For the Hip, we focused on optimizing different tissue-sparing surgical approaches. This has led to the creation of the Medacta MIS Platform in hip replacement. This formula follows the same successful pathway used with AMIS, supporting each surgical technique across the platform with a complete set of advanced instruments, appropriate implants, and hi-tech enabling tools underpinned by effective and continuous medical education. In addition, the market positively received new options for Medacta’s revision platform, designed to address even the most complex cases.

• NextAR Shoulder Augmented Reality application was enhanced with new features, including the intraoperative guidance in anatomic cases and an improved registration path, potentially leading to a reduced O.R. time. These updated functionalities are currently available in the United States and Australia, with plans to expand further worldwide.

• In Spine surgery, we launched the NextAR Rod Optimizer, which is unique on the market and a disruptive technology that is quickly redefining rod management. This sustainable and personalized real-time system provides surgeons with a selection of around thousand combinations⁴ of pre-bent rods for a tailored fit to each patient’s unique anatomy, avoiding manual rod bending or custom-made rods which require production and long wait times with significant advantages for surgeons and patients. The NextAR Rod Optimizer has been awarded the 2024 Spine Technology Award from Orthopedics This Week, the third Medacta product to receive this prestigious honor after NextAR Spine and MySpine.

• In the nascent Sports Medicine business line, Medacta introduced a simplified approach to M-ARS ACL at the AGA Congress 2024 in Zürich, Switzerland. This optimized technique streamlines the natural anatomy reconstruction of ACL, enhancing knee biomechanics to help restore the patient’s natural joint motion.

During the semester, 96 new jobs were added to support operations and a continued salesforce expansion across all geographies and business lines.

Reported Performance Measures

* Adjusted in 2024 for provision on litigations for patent matter with Mighty Oak Medical (Euro 2.1 million), extraordinary legal expenses (Euro 0.4 million) and MDR transition costs (Euro 0.2 million). The reconciliation is provided in the “Alternative Performance Measures” section of 2024 Half-Year Report.

** Adjusted in 2024 for extraordinary legal expenses (Euro 0.4 million), for the settlement of legal claims (Euro 1.9 million), MDR transition costs (Euro 0.2 million), non-recurring investments for corporate land acquisition and plant expansion (Euro 5.5 million) and international advances and deposits for future logistic expansion (Euro 0.2 million). Please see the “Alternative Performance Measures” section of 2024 Half Year Report for the reconciliation of the “Adjusted Free Cash Flow”.

Growth in all regions and business lines

In the first semester 2024, revenue increased 14.3% at constant currency and 13.1% on reported currency over the prior period, at EUR 288.6 million. We delivered robust organic growth, progressing with the acquisition of new customers across all geographies and business lines. In every region, the increase was sustained by a continued expansion of our salesforce and customer base, together with some new product introductions, particularly in the Knee business line through GMK SpheriKA, the shoulder with NextAR Shoulder for anatomic cases, and the introduction of the NextAR Rod Optimizer for Spine. Currency development had a negative impact on our top line with a headwind of 1.2%, mainly due to the strengthening of the Euro against the Australian Dollar and the Japanese Yen, only partially compensated by the Euro weakening against the Swiss Franc.

Gross Profit margin

The Gross Profit was EUR 197.7 million compared to EUR 175.9 million in the previous period. The Gross Profit margin was equal to 68.5% compared to 68.9% in the first semester of 2023. This change is primarily due to negative currency developments. Part of the impact stems from the effect on our revenue, as previously mentioned, while the weakening of the Euro against the Swiss Franc negatively affected the translation of our cost of sales. However, this was partially offset by the natural hedging by purchases in Euro and improvements in the industrial efficiency, which helped mitigate the FX driven increase in standard costs.

Adjusted EBITDA margin

Adjusted EBITDA reached EUR 77.5 million, up from EUR 71.9 million in H1 2023, representing a margin of 26.9%, including 1.2% headwind from FX. Net from FX effect, the EBITDA was in line compared to 1H23 result (28.2%). Additionally, the increase in sales and marketing expenses was mainly explained by the unusual concentration of marketing events in the first semester, particularly those related to Medacta’s 25^th Anniversary celebrations. This increase was partially offset by greater efficiency in G&A expenses.

Adjusted EBIT margin

The Adjusted EBIT amounted to EUR 45.5 million, 15.8% on revenue, compared to EUR 43.8 million, 17.2% on revenue, in the first semester 2023. The change of margin was due to the decrease of EBITDA and a negative contribution in currency development for additional 30 basis points.

Profit for the period

The Profit for the period was EUR 38.0 million, or 13.2% on revenue, representing an increase of 30.4% vs prior period.

Solid Balance Sheet

Medacta’s balance sheet has further strengthened, with total assets increasing to EUR 731.9 million and an equity ratio of 47.0% at the end of the reporting period. In the first semester of 2024, we generated a cash flow from operating activities of EUR 41.8 million. This robust cash flow generation was invested to sustain the short-term growth, primarily new instruments for Euro 34.2 million, and long-term growth for EUR 19.8 million, primarily buildings and product developments. As a result, we reported a negative free cash flow of EUR 12.2 million, compared to a negative EUR 5.3 million in the first half of 2023.

2024 Outlook

We confirm the existing guidance: revenue growth at constant currency in the range of 13% to 15% and Adjusted EBITDA margin at constant currency improving around 50 bps from 2023 reported, subject to unforeseen events.

Capital Markets Day and Mid-term Outlook

Medacta today holds its first Capital Markets Day and welcomes the financial community to its cutting-edge innovation hubs in Rancate and Castel San Pietro. The event will be hosted by Francesco Siccardi, CEO of Medacta, together with the senior management team. The program features a company overview followed by an outline of its strategy implementation through responsible and sustainable innovation, together with world-class medical education, indispensable for transforming innovation into benefits for patients, surgeons and the healthcare system. The success of this strategy is closely linked to Medacta’s continuous growth, with a direct presence in the most attractive markets and full control over the supply chain.

In the mid-term, revenue Compound Annual Growth Rate (CAGR) at constant currency is expected to be in the low double-digits region, and Adjusted EBITDA targeted to be around the 2024 result, before any currency effects. 

Francesco Siccardi, CEO of Medacta, commented: “I’m delighted to host our first Capital Markets Day, meeting the financial community on-site. It will be a great opportunity to share our dedication to advancing orthopedic care for improved patient outcomes worldwide and describe the main components of our strategy and our expectations in the mid-term”.

Webcast Today at 2:00 pm (CEST)

The presentation, held in English, will start at 2:00 pm (CEST) and it will be divided in two parts, the first part related to the 1H Results presentation and the second to the Capital Markets Day. The slide presentation, as well as the live online webcast, are accessible from Medacta website: https://www.medacta.com/EN/home-investors-global. Those who are not interested in participating in the Capital Markets Day may log off Zoom immediately after the 1H results presentation.

Contact

Medacta Group SA

Corrado Farsetta, CFO

investor.relations@medacta.ch

About Medacta

Medacta is a key global player specializing in the design, production, and distribution of innovative, personalized, and sustainable solutions for joint replacement, sports medicine, and spine surgery. Established in 1999 in Switzerland, Medacta is committed to improving the care and well-being of patients and maintains a strong focus on healthcare sustainability. Through close collaboration with expert surgeons globally, continuous investments in R&D, and the adoption of cutting-edge technologies, Medacta’s innovation prioritizes minimally invasive surgery and personalized solutions for every patient. Through the M.O.R.E. Institute, Medacta supports surgeons with a comprehensive and tailored program dedicated to the advancement of medical education. Medacta is headquartered in Castel San Pietro, Switzerland, and operates in over 60 countries. Follow us on Medacta TV, YouTube, LinkedIn and X.

Disclaimer

This press release has been prepared by Medacta Group SA (‘Medacta’ and together with its subsidiaries, ‘we’, ‘us’ or the ‘Group’). The information contained in the press release does not purport to be comprehensive and is not to be taken as containing any securities advice, recommendation, offer or invitation to subscribe for, purchase or redeem any securities regarding Medacta.

Forward-looking information

This press release has been prepared by Medacta and includes forward-looking information and statements concerning the outlook for our business. These statements are based on current expectations, estimates and projections about the factors that may affect our future performance. These expectations, estimates and projections are generally identifiable by statements containing words such as “expects”, “believes”, “estimates”, “targets”, “plans”, “outlook” or similar expressions. There are numerous risks and uncertainties, many of which are beyond our control, that could cause our actual results to differ materially from the forward-looking information and statements made in this press release. Important factors that could cause such differences include: changes in the global economic conditions and the economic conditions of the regions and markets in which the Group operates; changes in healthcare regulations (in particular with regard to medical devices); the development of our customer base; the competitive environment in which the Group operates; manufacturing or logistics disruptions; the impact of fluctuations in foreign exchange rates; and such other factors as may be discussed from time to time. Although we believe that our expectations reflected in any such forward-looking statement are based upon reasonable assumptions, we can give no assurance that those expectations will be achieved.

¹ Alternative Performance Measures

This press release contains certain financial measures of historical performance that are not defined or specified by IFRS, such as “constant currency”, “EBITDA”, “Adjusted EBITDA” or “CORE EBITDA”, “Free Cash Flow”, “Adjusted Free Cash Flow”, “Net Debt” and “Leverage”. Reconciliation of these measures as well as “CORE” financial measures is provided in the “Alternative Performance Measures” of our 2024 First Half Report. These Alternative Performance Measures (APM) should be regarded as complementary information to, and not as a substitute for, the IFRS beginning performance measures. For definitions of APM, together with reconciliations to the most directly reconcilable IFRS line items, please refer section headed “Alternative Performance Measures” of the 2024 First Half Report. The 2024 First Half Report is available at https://www.medacta.com/EN/financial-reports .

² Sappey-Marinier E, Howell SM, Nedopil AJ, Hull ML. The Trochlear Groove of a Femoral Component Designed for Kinematic Alignment Is Lateral to the Quadriceps Line of Force and Better Laterally Covers the Anterior Femoral Resection Than a Mechanical Alignment Design. J Pers Med. 2022 Oct 16;12(10):1724. doi: 10.3390/jpm12101724. PMID: 36294863; PMCID: PMC9605321.

³https://10more.medacta.com/assets/pages/video/?w=6c865c55-a98a-442f-b22b-51b17d25cbb5.mp4

⁴ Data on file Medacta

 Related Trademarks

Medacta Group Related Trademarks are registered at least in Switzerland. The products and services listed below may not be all-inclusive, and other Medacta products and services not listed below may be covered by one or more trademarks. The below products and services may be covered by additional trademarks not listed below. Note that Swiss trademarks may have foreign counterparts.

MyShoulder®, NextAR™, NextAR™ Knee, NextAR™ Shoulder, NextAR™ Spine, GMK® Sphere, MyKA™, AMIS®, GMK® SpheriKA, AMIS®, MySpine®.